Society & Culture

How you think about money affects what you do with it

A woman uses a calculator on a white desk with an open laptop in the background
New research from the University of Georgia suggests that recognizing spending patterns may be the key to better money management. (Getty Images)

Study suggests changing how you think about spending, saving can change financial behavior

You know you should set aside savings with every paycheck, live within your means and invest your money wisely. But do you do it?

New research from the University of Georgia suggests that answering three questions could give people insight into their spending and potentially help them modify their behavior in the future.

More than 230 people rated their agreement with three statements:

  • I can predict the situations when I will spend more than I meant to.
  • I know what I should do differently to manage my money better.
  • And I know what motivates me to spend or save the way I do.

“We can all think of those things that we know we should do but don’t,” said Kristy Archuleta, lead author of the study and a professor in the College of Family and Consumer Sciences.

Kristy Archuleta

“Like, I know I should get up and work out every day. I know I should eat more fruits and vegetables. But do I do those things? For me, it depends on the day. The same is true with our money.”

Participants also reported on their money habits, such as how frequently they set aside money for retirement or paid credit card bills in full. And they were tested on their financial knowledge of things like stocks and inflation and asked about anxiety related to the state of their finances.

The researchers found a connection between how people think about their finances and their financial behaviors. The study showed that improving financial knowledge, finding motivation to alter spending patterns and reducing anxiety about finances all resulted in increasing positive financial behaviors.

Recognizing spending patterns is key to better money habits

Identifying situations when you’re likely to spend more can help predict triggers. Once you know what those triggers are, you can figure out ways to avoid them.

“Maybe when you’re stressed, you know you’re going to spend more money because that’s how you cope with that stress,” said Archuleta, who works with financial coaches and planners to help them better assist clients. “So maybe you get up and go for a walk instead of sitting at your computer looking through Amazon.”

Figuring out what drives you to spend or save the way you do can provide the motivation to make lasting changes to budgets. “If I know what motivates me to save money, maybe I’m going to be more likely to do it,” Archuleta said. The three-question assessment is a good starting point for people to begin evaluating why they do what they do with their money.

The statement ‘I know what I should do differently to manage my money better.’ That’s great. … What is one thing you can do today in order to help you do that?” —Kristy Archuleta, College of Family and Consumer Sciences

For financial counselors, the assessment also provides an easy entry point to dive deeper into the reasons why people save or don’t save the way they should.

“For example, the statement ‘I know what I should do differently to manage my money better.’ That’s great. Follow up with a question such as: What is one thing you can do today in order to help you do that?” Archuleta said. “Maybe it’s packing your lunch before work so you don’t have to spend money on eating out. What is one thing that is doable? What is it that motivates you?”

Published in the Journal of Financial Counseling and Planning, the study was co-authored by Christina Glenn, Derek Lawson, Joy Clady and Syble Solomon.